The Decision to Invest in R&D: A Panel Data Analysis for Spanish Manufacturing

Abstract

Abstract This paper examines the factors determining firms' probability of investing in R&D activities using a sample of Spanish manufacturing firms drawn from the Encuesta sobre Estrategias Empresariales, for the period 1990-2000. We estimate a panel data discrete choice model that allows controlling for unobserved firm heterogeneity, using maximum-likelihood techniques. Our results show that export intensity, a significant market share, highly qualified workforce, firm size, labor productivity, advertising intensity, and regional and local technological spillovers have a positive and significant influence on the probability of investing in R&D. In addition, this probability decreases with firm age and foreign participation in the capital of the firm